The most basic screen for value stocks consists of these metrics: Does it trade with a low price-to-earnings ratio relative to the market as a whole?
For example, if the S&P 500 has a P/E ratio of 34, then the screen finds those companies with multiples of less than 20.
Does the business have a five-year record of positive earnings? Does the stock offer investors a dividend? Is the debt-to-equity ratio less than .50? Does it pay a dividend?
Those are basics for the beginning of research into subject. Those five basic measures narrow down the search quickly. The researcher goes from about 10,000 names to about 200.
When the “must trade above the 200-day moving average” is added, the number remaining might be a hundred or so. That one can change quickly so it must be watched.
Here are five of the stocks that now fit this initial stage of value analysis:
Abbott Laboratories
The medical devices company peaked in early March at $140 but continues to trade above its 200-day moving average. The P/E ratio is 16.69 and the debt-to-equity ratio is .27. Earnings over the past five years increased 29.98%. Abbott has a market capitalization of $223 billion and pays a dividend of 1.85%.
Kinross Gold
This Canadian precious metals miner has a market cap of $16.61 billion. The P/E ratio is 13.76. The past five-year earnings is up 6.28%. The debt-to-equity ratio is .17. Kinross Gold pays a .89% dividend. The price chart shows how the stock trades well above its 200-day moving average.
Shell
The big integrated oil and gas company, based in the United Kingdom, trades with a P/E ratio of 15.56. The debt-to-equity ratio is .43. The past five years earnings record is a positive 5.38%. Shell has a market cap of $200.52 billion. The company pays a 4.20% dividend. The stock in April dipped below the 200-day moving average and has bounced back above it.
Tencent Music Entertainment
This China-based internet content and information company has a P/E ratio of 19.77 and a market cap of $11.69 billion. The debt-to-equity ratio is .08. Over the past five years, earnings are up by 11.19%. The stock is well above its 200-day moving average and just hit a new high. Tencent pays a dividend of .58%.
Travelers Companies
This brand-name insurance firm has a market cap of $59.59 billion and trades with a P/E ratio of 14.32. The debt-to-equity ratio is .28. Over the past five years earnings are up by 16.59%. Travelers pays a dividend of 1.66%. After dipping below the 200-day moving average in April, the stock now is priced well above it.
These five stocks fit the mold for value at the most initial stage of research. A deeper look is required, of course.
Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.
More analysis and commentary at johnnavin.substack.com.
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